Derivative Liabilities

9 Months Ended

Mar. 31, 2021

Derivative Liability [Abstract]

Derivative Liabilities

Derivative liability - warrants

The Company issued warrants in connection with convertible notes payable which were issued in January and February 2021. These warrants had fixed exercise prices ranging from $0.0055 to $0.02 per share, with each warrant having a two-year life.

Accounting for Derivative Warrant Liability

The Company’s derivative warrant instruments have been measured at fair value at March 31, 2021 using the Cox, Ross & Rubinstein Binomial Tree valuation model. The Company recognizes the derivative liability related to those warrants at the time that the warrants were issued in its consolidated balance sheet as liabilities. The liability is revalued at each reporting period and changes in fair value are recognized currently in the consolidated statements of operations. The initial recognition and subsequent changes in fair value of the derivative warrant liability have no effect on the Company’s cash flows.

Derivative liability – convertible notes

The Company has certain convertible notes with variable price conversion terms. Upon the issuance of these convertible notes and as a consequence of their conversion features, the convertible notes give rise to derivative liabilities. The Company’s derivative liabilities related to its convertible notes payable have been measured at fair value at March 31, 2021 and March 31, 2020 using the Cox, Ross & Rubinstein Binomial Tree valuation model.

The revaluation of the convertible debt at each reporting period, as well as the charges associated with issuing additional convertible notes, and warrants, resulted in the recognition of a gain of $855,587 and $462,249 for the nine months ended March 31, 2021 and 2020, respectively in the Company’s consolidated statements of operations, under the caption “Gain (loss) in change of fair value of derivative liability”. The fair value of the warrants at March 31, 2021 and June 30, 2020 was $732,295 and $350, respectively. The fair value of the derivative liability related to the convertible debt at March 31, 2021 and June 30, 2020 is $214,140 and $361,671, respectively, which is reported on the consolidated balance sheet under the caption “Derivative liability”.

The Company has determined its derivative liability to be a Level 3 fair value measurement. The significant assumptions used in the Cox, Ross & Rubinstein Binomial Tree valuation of the derivative are as follows:

	Nine Months Ended March 31,
	2021							2020
Effective exercise price	$				$	0.0055 - 0.01089		$		$	0.00049 - 0.0033
Effective market price					$	0.0189				$	0.009
Volatility							248.4% - 319.5%					223% - 521%
Risk-free interest rate			0.01	%
Terms		60 days – 652 days							30 days – 650 days
Expected dividend rate						0.00	%				0.00	%

Changes in the derivative liabilities during the nine months ended March 31, 2021 is follows:

Derivative liability at June 30, 2020	$	438,553
Derivative liability expense		1,059,282
Derivative liability related to discount on convertible note		475,000
Gain on change in fair value of derivative liability		(855,587	)
Derivative liability at March 31, 2021	$	1,117,248